Trouble Emerging

The Chinese stock market continues to fall and the decline is accelerating. In the first six months of 2018, the Shanghai Stock Exchange Composite Index declined -23% and is now down -46% from the highs set in 2015. The Chinese renminbi has fallen sharply in recent months and may be causing emerging market equity investors some concern. However, a more fundamental reason is likely the cause for the increased risk aversion. Debt as a percentage of GDP has exploded in China over the last ten years, rising from 160% of GDP in 2008 to 266% of GDP in 2017 according to Bloomberg Economics estimates. Many suggest China is on an unsustainable path. The stock market is starting to reflect these greater risks.


China makes up over 30% of the Emerging Markets Equities Index (EEM), so Chinese equities need to stabilize before EEM has any chance of resuming its uptrend. A reversal of the recent strength of USD would help, but for now, the Active Asset Allocator continues to hold a 30% allocation to cash in advance of the next opportunity to invest.

At Secure Investments, I advise individual clients on their pension and non-pension fund investment portfolios. To learn more about my Active Asset Allocator and Gold Trader  investment strategies, please get in touch at or 086 821 5911. If you are reading this via LinkedIn, why not visit Secure Investments and subscribe to get exclusive content for free. No spam, ever. Just great stuff.


The information contained herein should not be taken as an offer of investment advice or encourage the purchase or sale of of any particular security or investment. It is provided for information purposes only. Secure Investments and its content providers makes no representation or warranty of any kind with respect to the services described, analysis or information obtained arising from use of the pages on this website. Information provided is obtained from sources deemed to be reliable and is provided solely on a best efforts basis. Secure Investments and its content providers do not guarantee the completeness or accuracy of such information and do not accept any liability for any loss or damage arising out of negligence or otherwise as a result of use or reliance on this information, whether authorised or not. The use of the website is at the user's sole risk. Not all recommendations are necessarily suitable for all investors and investment policy must be tailored to suit the circumstances of the individual. We recommend that readers consult their professional adviser before acting on any advice or recommendation on this website. The value of any investment may fall as well as rise and you may not recover the full amount originally invested. Past performance or simulated performance is no guarantee of future investment returns. The value of your investment may be subject to exchange rate fluctuations which may have a positive or adverse effect on the price or income or the securities.